The sudden shutdown of the on-demand bus service Bridj has some wondering how many ride-hailing services can flourish in Boston.
Bridj billed itself as "the next iteration of the city bus." The service provided flexible bus routes based on demand from riders, who could hail rides by using an app. And Bridj had become a go-to commuting option for its thousands of regular customers, like Casey Vemis.
"I loved having that guarantee of a place to sit. [I'd] wake up in the morning, reserve my seat and know that I’d have a comfortable ride," Vemis said.
The 36-year-old lives in South Boston and used Bridj to get to and from her job in the financial district. She said the service was quicker and more reliable than public transit — and well worth the extra cost. Now, Vemis has to wake up earlier and walk farther to use traditional transportation options to commute.
Bridj CEO Matthew George said the decision to shut down the company after three years of operating was frustrating. He said Bridj was profitable but needed a lot more capital to grow. It had an exclusive funding deal with an automaker, but the deal fell through.
"Because of the way ... the deal was structured we were really locked into that partner," George said. "And just like anything else, you double down and you know the risks. Sometimes it works, and sometimes it doesn’t. Very clearly [it] didn’t work in this case for us."
George said he can't disclose the name of the car company due to an agreement.
There was some excitement about what Bridj was doing. The company had been in talks with the MBTA about possibly providing late-night bus service. Bridj also ran a pilot program in Kansas City, Missouri, where it partnered with the local transit agency and Ford Motor Company to provide on-demand bus service. And several observers hoped to see its business grow more widely.
So, the shutdown of Bridj has some wondering just what went wrong. David Frankel, the managing partner at venture capital fund Founder Collective, said there may have been too many other options. There's the MBTA, which is generally cheaper. There are also other larger ride-hailing companies like Uber and Lyft, which have billions in funding.
"I think Bridj closing down is clearly indicative of the fact that it is highly competitive between what the city offers and between other alternatives," Frankel said. "This is becoming a competitive space, and Bridj came up against that."
But, George insists there's room for an on-demand bus service here. He said the startup's downfall is all about financing.
"The idea and the concept, we showed that it was incredibly viable [and] profitable," George said. "But at the end of the day, this really requires the auto manufacturers, the governments and some of the other stakeholders to really think differently about how we're providing transportation to the vast majority of the world."
Bridj could have pursued venture capital funds, but George said that wouldn't have given the company enough funds to really grow. Bridj paid drivers $15 an hour and had high labor costs. There was also the cost of leasing buses. Meanwhile, companies like Uber and Lyft don't have the same costs because their drivers are independent contractors who use their own vehicles.
Frankel said these costs likely made a deal with a car company more attractive to Bridj — instead of getting traditional venture capital funding.
"If you see this is going to be incredibly capital intensive, [and you're] really going to need a huge injection or a strategic capital that can afford much more than what we can raise in venture capital, then the route that they were pursuing would seem to have made sense," Frankel said.
George said partnering with an auto manufacturer would have given his company the necessary resources to get more vehicles and expand quickly. Major auto manufacturers are already partnering with startups on a number of initiatives. And companies are trying out services similar to Bridj. Last year, Ford bought Chariot, a San Francisco-based startup that operates a shuttle service. And Lyft has been testing a shuttle service in San Francisco and Chicago.
While it didn't work out for Bridj, George still believes in the idea of a new type of city bus that is flexible and determines routes and pricing based on consumer demands. He now hopes other companies continue to move the concept forward.
Bridj had 50 full-time employees. George says he's focused on helping them find new jobs.
This article was originally published on May 02, 2017.
This segment aired on May 2, 2017.